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For third year, medical schemes pay out more in claims than they earn in premiums

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Tuesday, 05 December 2017 14:18

BusinessLive reports that a report by Alexander Forbes Health entitled Diagnosis‚ released on Monday‚ shows that most South African medical schemes are‚ for the third year‚ paying out more in claims than they earned in premiums.

At the same time‚ consumers’ medical premiums will again increase above inflation in 2018‚ as Alexander Forbes noted has happened for 17 years in a row. The Diagnosis report shows that in 2016‚ the medical-aid industry spent R2bn more than it earned in monthly premiums. The overall industry deficit was R2.390bn‚ almost twice the R1.219bn deficit in 2015. Roshan Bhana of Alexander Forbes Health said the research team had anticipated that the 2017 financial results of schemes would reflect an improvement from the 2015 and 2016 experience‚ in which the schemes had had high claims. "This is in part due to the interventions that schemes have put in place to manage two years of unusually high claims." But this was not the case. "The industry‚ as a whole‚ also experienced its highest claims ratio since 2009‚" according to Bhana. Alexander Forbes Health also worked out that increases to medical premiums had ranged between 2.5% and 4.5% above consumer price inflation over the past 17 years.